LEADING NATIONAL ADVERTISERS: LEADERS BACK BRANDS WITH $52.1 BILLION IN ADS: SPENDING RISES 10.4%; OLYMPICS, ELECTIONS POWER MEDIA GAINS

The 100 leading National Advertisers gave permanency to the word change, as they super-charged ad spending by 10.4% for a collective $52.1 billion expenditure in 1996, according to Advertising Age's 42nd annual report on these leading marketers.

That growth-one of the decade's highest-was fueled by $30.85 billion in media, up 10.7%, with the rest attributed to unmeasured forms of advertising and marketing such as direct mail, sales promotion, co-op, couponing, special events and Web advertising.

MEDIA ENGINES ROAR

The media portion, bolstered by a tightening in the ad market attributed to the Summer Olympics and presidential elections, backed 472 brands with more than $10 million each from these elite vs. 423 brands similarly supported in 1995.

The second 100 (see P. S-8) were even stronger, up 18.8% to $10.4 billion in advertising, $6.8 billion of that in media, up 17.2%.

Procter & Gamble Co. continued its lock on the top spot, spending $2.62 billion, down 3.9%, some $1.52 billion of that in media. The fall-off can be attributed largely to loss of advertising for Aleve pain remedies, pulled with Femstat 3 by Roche Holdings from a joint marketing venture with P&G.

GM TURNS BRIDESMAID

General Motors Corp. booted Philip Morris Cos. from the runner-up spot by spending $2.37 billion, up 14%, with $1.74 billion of that in media-largest total media expenditure by any member of the 100 Leaders. PM, whittling expenditures from its cigarette brands, fell 10.8% to $2.28 billion.

GlaxoWellcome and Pharmacia & Upjohn, two of the eight newcomers, were elevated onto the list by virtue of their direct-to-consumer advertising of pharmaceutical brands-an ad hotspot if ever there was one.

Drugs marketed DTC gave advertising an opportunity to crow. Advertising's usual incubation period needed to build impressions to influence a sale was obviated by the sudden clinical-like experimentation with consumer media.

In anti-osteoporosis drugs, for example, the category grew to $248 million in sales in 1996, up from $78 million in 1995-growth credited to Merck & Co.'s $28 million in media support for Fosamax. Advertising of Fosamax, begun in first quarter '96, vaulted its share from 31% to 71% by year-end. No other drug in the category drew DTC ads, and shares of each correspondingly slipped out of sight.

If DTC is advertising's yen, cigarettes are its yang. They are a declining media category, down nearly 4% to $466.8 million in 1996, although last rites are far from being read. Industry watchers see proposed ad regulations as freeing up a lot of marketing firepower, just as industry-imposed restrictions opened up new media channels for cigs in the early 1970s. Some of the firepower is being redirected subtly.

Marketers have begun to romance the public with icons to supplant brand names (to be outlawed in ads)-Western belt buckles for Philip Morris' Marlboro; "Pleasure" as a subliminal descriptor for Lorillard's Newports.

Going back to the basics is a tried-and-true marketing bromide being dusted off in mature industries like beer and soft drinks.

BREWERS PUSH BASICS

Leading brewers, distracted most of the decade by ices, drys, ambers, golds, micros and the like, have returned their media attention to their big-money brands: In first-quarter '97, spending is up a collective 59% on Budweiser at Anheuser-Busch Co., Miller Lite at Miller Brewing Co., and Coors Light at Adolph Coors Co.

A reason behind the refocusing is the high cost of developing new products. Such costs are hard to justify in a market with flat to declining sales (barrelage was up less than 1% in '96).

Coca-Cola Co. and PepsiCo's Pepsi-Cola Co. are focusing on their big brands to the point of giving lip-service to their new age and alternative soda lines. Lesser rivals are being squeezed out.

PEPSI SPINS OFF FAST FOOD

In the U.S., sharepower has reached 43.1% for Coca-Cola and 31% for Pepsi-Cola-so dominant that in the words of Coke, water is becoming its main competitor. Cost of such ubiquity is dear.

PepsiCo is spinning off its restaurants into newly formed Tricon Global Restaurants to focus on "core" units, Pepsi-Cola and Frito-Lay. Loss of these restaurants is likely to gain Pepsi-Cola more fountain business. In the past, fast-food competitors (to PepsiCo restaurants) avoided striking contracts with Pepsi-Cola because it meant supporting the competition.

Acquisitions affected paper product and feminine hygiene categories. Kimberly-Clark Corp.'s acquisition of Scott Paper Co. and the recent merger of Fort Howard Corp. and James River Corp. into Fort James are reviving branding in the commodity-like categories of bath tissue and paper towels, and P&G's acquisition of Tambrands is giving it hegemony status in the tampon quarter of the feminine hygiene market.

SUVS FURTHER SEGMENT

Maturation in the sport utility vehicle market, 15% of the U.S. car and light-truck market, is enducing segmentation into mini, full-size and compacts.

Segmentation has thrown marketing of Ford Explorer out of kilter; last year this leading SUV compact dropped 4 share points, suddenly requiring incentives to move the line for the first time. Incentives typically rob the ad budget: Explorer's media dropped 56% in '96.

In foods, ConAgra's Healthy Choice is feeding 300 stock-keeping units into the $23.8 billion reduced-fat foods market, but sales have been sluggish.

Eying this and sales erosion in several RJR Nabisco SnackWell's lines, food analysts are posing that Americans may be tiring of reduced-fat foods because of taste and relatively high caloric levels that belie the perceived benefits.